March 15, 2004

Red Broadcast Flag

I am increasingly concerned about the impact Broadcast Flag regulation will have upon innovation and consumer choice. Luckily there are some good organizations tracking and fighting this issue:

...In a March 15 filing with the FCC on the broadcast flag, Public Knowledge said, “We have concluded from reading the full range of submissions in the broadcast-flag and plug-and-play proceedings that full regulatory control over all the ways consumers use content is precisely what certain content holders want.” Had such controls been in effect in 1976, when the video cassette recorder (VCR) was invented, “devices such as the VCR, the TiVo personal-video recorded, and Windows-based ‘media PCs’’ would have been drastically hindered on their way to market – if allowed at all,” Public Knowledge said in its filings.

Public Knowledge also argued that content companies are attempting to “roll back the impact of the Supreme Court’s decision” in 1984 that allowed the VCR to be used to record television programming for later viewing. In reply comments in the plug-and-play proceeding governing the use of cable-ready devices, Public Knowledge said it was inconsistent for content companies to argue they want to extend controls over analog content as well. Such requests to the Commission call into question the FCC’s central assumption that digital content is more subject to piracy, Public Knowledge said...

In addition to filing its own comments with the FCC and launching the public-interest group lawsuit challenging the broadcast flag rule, Public Knowledge has worked with Internet entrepreneur Scott Rafer to organize a filing by about two dozen Silicon Valley companies which argues that the broadcast-flag proceeding poses a threat to software innovation overall and to open-source software in particular. Rafer, CEO of Feedster, a blog and news search engine, said the level of interest from companies which hadn’t participated before “is a great first step to having consistent, rich participation by Silicon Valley companies in the regulatory process.”

I was happy to contribute a comment, mostly on the mission-creep potential of this regulation, impact on open source and innovation. Regulatory certification of products simply doesn't work with the open source model of commons-based peer production. Most of the innovation in the past few years has happened around new models of sharing and co-creation where use is fair and users are developers.

Simson Garfinkel recently described what the next step in Broadcast Flag mission-creep (reg. req.) will be:

So what happens when the broadcast flag has obviously failed? The MPAA will be back, this time demanding that even stronger anti-consumer technology be bundled into consumer electronics and desktop computers. Ultimately, Hollywood will settle for nothing less than the elimination of any consumer technology that can make high-quality recordings.

Some of my greater concerns are how far creep could go, bleeding from regulating consumer electronics towards software. Some could say that hardware companies have had to submit their devices for compliance for years and it hasn't hampered innovation. Who is to say how the past could have unfolded, but I can comment how it could effect the software industry. The economics of a hardware startup are fundamentally different, requiring a greater up-front investment (in amortizable capital expenditures) to be able to manufacture and distribute products. With software, especially software-as-service, a low up-front investment (almost all operating expenditures) can bring a product to market. Further, the nature of the software industry is changing to embrace change. Even without agile development practices, there is a greater overlap of design and implementation, iteration that assures features map actual requirements.

For any software startup, having to break after design to gain certification by authorities and then finally implement would break the model. At Socialtext, we roll out new versions on a monthly basis. A week's delay could mean that we don't have a feature in place to gain a strategic customer or similar cascading disconnect from the market. Not to mention hiring a FTE to manage the compliance process or the burden of filing fees and other unforseen overhead. Essentially, creating a compliance burden would turn the economics of the software business model into the hardware business model.

Perhaps a more obscure point is that any barrier to iteration moves jobs offshore. Offshore development excels at low cost production according to firm specifications. I do believe this is a good thing for the US economy over time, as production of commodity components enables innovation higher in the value chain. In areas where developers and product managers more directly interact with customers such as with custom implementation and agile development. But if all software suddenly had to be specified, and you had, say, a week between spec and when it could be implemented -- it would be a strong incentive to ship the job aboad, even with the prospect of failed compliance, because of sheer economics.

You could call these concerns of mine paranoia or vigilance or both. Regardless, the Broadcast Flag issue is larger than consumer rights -- it should raise a red flag for producers of the non-Hollywood variety as well.

Comments

I am increasingly concerned about the impact Broadcast Flag regulation will have upon innovation and consumer choice. Luckily there are some good organizations tracking and fighting this issue:

...In a March 15 filing with the FCC on the broadcast flag, Public Knowledge said, “We have concluded from reading the full range of submissions in the broadcast-flag and plug-and-play proceedings that full regulatory control over all the ways consumers use content is precisely what certain content holders want.” Had such controls been in effect in 1976, when the video cassette recorder (VCR) was invented, “devices such as the VCR, the TiVo personal-video recorded, and Windows-based ‘media PCs’’ would have been drastically hindered on their way to market – if allowed at all,” Public Knowledge said in its filings.

Public Knowledge also argued that content companies are attempting to “roll back the impact of the Supreme Court’s decision” in 1984 that allowed the VCR to be used to record television programming for later viewing. In reply comments in the plug-and-play proceeding governing the use of cable-ready devices, Public Knowledge said it was inconsistent for content companies to argue they want to extend controls over analog content as well. Such requests to the Commission call into question the FCC’s central assumption that digital content is more subject to piracy, Public Knowledge said...

In addition to filing its own comments with the FCC and launching the public-interest group lawsuit challenging the broadcast flag rule, Public Knowledge has worked with Internet entrepreneur Scott Rafer to organize a filing by about two dozen Silicon Valley companies which argues that the broadcast-flag proceeding poses a threat to software innovation overall and to open-source software in particular. Rafer, CEO of Feedster, a blog and news search engine, said the level of interest from companies which hadn’t participated before “is a great first step to having consistent, rich participation by Silicon Valley companies in the regulatory process.”

I was happy to contribute a comment, mostly on the mission-creep potential of this regulation, impact on open source and innovation. Regulatory certification of products simply doesn't work with the open source model of commons-based peer production. Most of the innovation in the past few years has happened around new models of sharing and co-creation where use is fair and users are developers.

Simson Garfinkel recently described what the next step in Broadcast Flag mission-creep (reg. req.) will be:

So what happens when the broadcast flag has obviously failed? The MPAA will be back, this time demanding that even stronger anti-consumer technology be bundled into consumer electronics and desktop computers. Ultimately, Hollywood will settle for nothing less than the elimination of any consumer technology that can make high-quality recordings.

Some of my greater concerns are how far creep could go, bleeding from regulating consumer electronics towards software. Some could say that hardware companies have had to submit their devices for compliance for years and it hasn't hampered innovation. Who is to say how the past could have unfolded, but I can comment how it could effect the software industry. The economics of a hardware startup are fundamentally different, requiring a greater up-front investment (in amortizable capital expenditures) to be able to manufacture and distribute products. With software, especially software-as-service, a low up-front investment (almost all operating expenditures) can bring a product to market. Further, the nature of the software industry is changing to embrace change. Even without agile development practices, there is a greater overlap of design and implementation, iteration that assures features map actual requirements.

For any software startup, having to break after design to gain certification by authorities and then finally implement would break the model. At Socialtext, we roll out new versions on a monthly basis. A week's delay could mean that we don't have a feature in place to gain a strategic customer or similar cascading disconnect from the market. Not to mention hiring a FTE to manage the compliance process or the burden of filing fees and other unforseen overhead. Essentially, creating a compliance burden would turn the economics of the software business model into the hardware business model.

Perhaps a more obscure point is that any barrier to iteration moves jobs offshore. Offshore development excels at low cost production according to firm specifications. I do believe this is a good thing for the US economy over time, as production of commodity components enables innovation higher in the value chain. In areas where developers and product managers more directly interact with customers such as with custom implementation and agile development. But if all software suddenly had to be specified, and you had, say, a week between spec and when it could be implemented -- it would be a strong incentive to ship the job aboad, even with the prospect of failed compliance, because of sheer economics.

You could call these concerns of mine paranoia or vigilance or both. Regardless, the Broadcast Flag issue is larger than consumer rights -- it should raise a red flag for producers of the non-Hollywood variety as well.